Xcel Brands (XELB) Q4 2025 Earnings Transcript

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DATE

Tuesday, May 19, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Robert W. D'Loren
• Chief Financial Officer — James F. Haran
• Vice President, Investor Relations — Seth Burroughs

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TAKEAWAYS

• Revenue -- $1.1 million, down from $1.3 million, with the decline primarily attributed to a temporary gap in wholesale shipments during the apparel supplier transition for the C. Wonder and Christie Brinkley brands.
• Adjusted EBITDA Loss -- Adjusted EBITDA loss of $700 thousand, flat versus prior year according to management.
• Net Income (Loss) -- GAAP net loss of $2.5 million, or -$0.42 per share, compared to a net loss of $2.8 million, or -$1.18 per share, in the previous year’s period.
• Non-GAAP Net Income (Loss) -- Non-GAAP net loss of $1.4 million, or -$0.24 per share, versus a non-GAAP net loss of $1.4 million, or -$0.58 per share, last year.
• Direct Operating Costs and Expenses -- $2.1 million, reduced from $2.3 million, mainly reflecting management’s previously disclosed cost-reduction actions.
• Impairment Charge -- $61 thousand noncash trademark impairment on the Judith Ripka brand, which was subsequently sold in April for $2.3 million cash plus future earnout.
• Interest and Finance Expense -- $590 thousand, slightly up from $560 thousand; management stated most interest on term loan debt accrues and does not require cash payments until 2027.
• Social Media Following -- Growth from 5 million to over 46 million followers across the brand portfolio following influencer-led brand launches.
• Influencer Brand Pipeline -- Five influencer-led brands signed last year; two launched in first quarter, with three more scheduled to launch through the rest of 2026 and into 2027.
• Financing Capacity -- Company established a committed equity line facility for up to $15 million in available funding over two years and has not yet drawn on it.
• Recent Debt Activity -- In April, the company entered into $3 million of senior secured notes at a fixed interest rate and paid down a portion of variable-rate term loan debt.
• Supplier Transition Impact -- HSN sales for C. Wonder and Christie Brinkley reduced during quarter due to a supplier change, but new licensee began shipments within the quarter and management expects “significant growth” in coming quarters.
• Longaberger Brand Launch -- Scheduled for 2027; to be co-created with influencer Shannon Doherty, who has 3 million followers.
• Brand Portfolio Strategy -- Management articulated plans to sell select legacy brands, confirmed sale of Judith Ripka at approximately 6x gross royalty income, and referenced further sale opportunities under consideration.
• Current Cash Position -- Restricted cash of $1.1 million and unrestricted cash of $200 thousand as of March 31, 2026.

SUMMARY

Xcel Brands (NASDAQ:XELB) shifted its business mix toward influencer-led brand launches, resulting in a significant increase in combined social media reach and early-stage wholesale and streaming distribution across major platforms. Leadership confirmed execution of major liquidity initiatives, including a new $15 million equity line facility and April’s refinancing with a $3 million senior secured note, both designed to enhance operational flexibility and acquisition capacity. The company’s direct cost structure declined in the period due to the prior year’s efficiency measures, while leadership confirmed continued focus on further operating expense reduction as incremental influencer-driven revenue grows. The sale of the Judith Ripka brand at a 6x gross royalty multiple provided immediate liquidity and management confirmed interest in further divestitures of legacy brands under favorable terms. All major influencer-led brands are slated for omnichannel rollout, and management described the influencer economy as pivotal, supported by “67% of consumers trust influencer recommendations over legacy brand ads,” which signals a deliberate structural pivot for future growth.

• Company indicated all influencer brands are planned for rollout across live-stream, brick-and-mortar, and e-commerce channels rather than a single-channel approach.
• Chief Executive Officer D'Loren said of the current expansion, “We do expect to launch Caesars Amazon store. In the next 60 days, and the first products on the Amazon store will be EcoStrux cleaning products. And, shampoos and conditioners, and collars, leashes, and dog apparel, and other dog accessories.”
• Early shows for two newly launched influencer brands received “as expected” performance and prompted a strategic product shift from hard kitchen to food products due to stronger customer response; management noted rapid product turnaround is achievable within the U.S. supply chain.
• Leadership stated that the supplier change for HSN impacted short-term sales for two brands, but product quality improved and shipments resumed, positioning these brands for revenue growth over the next two quarters.
• Management confirmed a 12-month operational timeline from execution to first revenue for influencer partnerships, explaining current launches reflect talent signed in the prior year.
• CFO Haran noted that a majority of current term loan interest will continue to be paid in kind, deferring required cash outlays until 2027.
• Management said a “big strategic partnership” may be announced before the end of the second quarter, but provided no specifics or financial details.

INDUSTRY GLOSSARY

• Influencer-led brand: Consumer product line launched, promoted, or co-created in partnership with social media personalities or recognized creators, leveraging their audience reach for sales and marketing.
• Adjusted EBITDA: Earnings before interest, taxes, depreciation, amortization, and certain items management considers non-core, as referenced for operational performance.
• Paid in Kind (PIK): Interest accumulated on a loan that does not require immediate cash payment but is instead added to the outstanding loan balance to be paid at a later date.
• Committed equity line facility: Prearranged funding agreement allowing a company to raise equity capital up to a fixed amount over a set period at its discretion.

Full Conference Call Transcript

Seth Burroughs: Good afternoon, everyone, and thank you for joining us. Welcome to the Accel Brands First Quarter of 26 Earnings Call. We greatly appreciate your participation and interest. With us on the call today are Chairman and Chief Executive Officer, Robert D'Loren and Chief Financial Officer, Jim Haran. By now, everyone should have had access to the earnings release for the quarter ended March 31, 2026. In addition, we filed our quarterly report on Form 10-Q with the Securities and Exchange Commission last Thursday. The release and quarterly report will be available on the company's website at www.excelbrands.com. This call is being webcast, and a replay will be available on the company's Investor website.

Before we begin, please keep in mind that this call will contain forward-looking statements. All forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from certain expectations discussed here today. These risk factors are explained in detail in the company's most recent annual report filed with the SEC. Excel does not undertake any obligation to publicly update or revise any forward-looking statements. Whether as a result of new information, future events or otherwise. The dynamic nature of the current macroeconomic environment means that what is said on this call could change materially at any time.

Finally, please note that on today's call, management will refer to certain non GAAP financial measures, including non GAAP net income, non GAAP diluted EPS and adjusted EBITDA. Our management uses these non GAAP metrics as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to identify business trends relating to the company's results of operation. Our management believes these financial performance measurements are also useful because these measures adjust for certain costs and other events that management believes are not representative of our core business operating results and thus, they provide supplemental information to assist investors in evaluating the company's financial results.

These non GAAP measures should not be considered in or as alternatives to net income, earnings per share, or any other measure of financial performance calculated and presented in accordance with GAAP. You may refer to the attachment to the company's earnings release or the Forms 10 Q for a reconciliation of non GAAP measures. And now, I am pleased to introduce Robert D'Loren, Chief Executive Officer. Bob, please go ahead.

Robert W. D'Loren: Thank you, Seth. Good afternoon, everyone, and thank you for joining us today. I would like to start today's call with a brief update on recent developments since the recent filing of our annual Form 10-K and our outlook moving forward. Then, our CFO, Jim Haran, will discuss our financial results for the quarter in more detail. We continue to work hard with all our licensee production partners powerful influencers, and strategic retail partners to drive our business. We launched 2 of our influencer- or creator-led brands, toward the end of the first quarter, and we expect to launch 2 more in the fall and another in spring 27.

As we previously mentioned, we announced our influencer-led brands with Cesar Millan, Gemma Stafford, Jenny Martinez, Coco Rocha, and Shannon Doherty. These influencer-led brands grew the social media following in our brand portfolio from 5 million to over 46 million. Based upon our pipeline of new influencer-led brands, we are on track to reach 100 million followers across our brand portfolio. We began wholesale shipments with our licensees for 2 of our influencer-led brands during the first quarter. And on air programming commenced for them on QVC and HSN in the second quarter.

As I mentioned, the other influencer led brands will be shipping and launching throughout the rest of 2026 on interactive TV and at bricks and e commerce retailers. We are very pleased and optimistic given early results and demand for these brands. I should add that our TV and streaming content reaches well over 100 million households and generates tens of millions of media impressions. Per month Many of our investors and licensing partners have asked why we are so excited by the influencer-led brand opportunity. Please allow me to illuminate this a little.

According to a recent report issued by Goldman Sachs, the influencer or creator economy generated $254 billion of sales in 2025 and is expected to grow to over $2 trillion by 2035. Why is this happening? Marketing dollars are shifting to influencers and influencer-led brands given the relatively high return on ad spend according to statistics from Shopify influencer marketing hub. Industry surveys note that 67% of consumers trust influencer recommendations over legacy brand ads. We believe we have fully entered this fast growing market and will continue to penetrate it over the coming years.

We continue to explore opportunities to sell certain of our legacy brands and close the sale of our Judith Ripka brand at approximately 6x gross royalty income in Q2. This is consistent with the sale multiple of our formerly owned brand, Isaac Mizrahi, and his further confirmation of the value of our brand. I should note that recent analyst reports that ascending influencer-led brands are trading at revenue multiples as high as 15x revenue. We generated an adjusted EBITDA loss of $700 thousand in Q1. Flat from the prior year quarter, which we expected. During the quarter, we had approximately $100 thousand in non-recurring expenses.

And lower HSN sales in Q1 caused by a change in the apparel supplier for our C. Wonder and Tower Hill by Christie Brinkley brand. Well, this change disrupted inventory availability in Q1, we have significantly improved product quality, which should drive sales going forward. C. Wonder and Christy Brinkley remain 2 of the most popular brands on HSN. And the new licensee that supplied product on HSN began shipping during this quarter. With the supplier transition behind us, we expect significant growth in these brands compared to the past 2 quarters. The Longaberger brand is scheduled to launch in 2027 with new products co-created by Shannon Doherty, Shannon has 3 million followers and is perfect for Longaberger.

We are pleased with the progress of our brand portfolio. And we believe revenue growth is now in front of us. With that, I would like to turn the call over to our CFO, Jim Haran, to cover our financial results for the quarter. Jim?

James F. Haran: Thanks, Bob. Good afternoon, everyone. I will now briefly discuss our financial results for the quarter ended March 31, 2026. Revenue for the first quarter of 26 was $1.1 million compared with $1.3 million for the 2025. The decrease from prior year was primarily attributable to HSN's transition to a new apparel supplier for our C. Wonder and Christie Brinkley brands in the 2025. Which caused a temporary gap in wholesale shipments and negatively impacted sales for these brands and our associated licensing revenues during the current quarter. Direct operating cost and expenses were $2.1 million in the current quarter, down from $2.3 million in the prior year quarter.

This decrease from prior year was primarily attributable to cost reduction actions taken by management during 2025, which reduced payroll and benefit costs. Looking at our other operating costs and expenses, which were all noncash in nature, During the current quarter, we recognized a small impairment charge of $61 thousand to write down the value of the Judith Ripka trademarks, which we then subsequently sold in April for $2.3 million in cash plus future earn out consideration. Our depreciation and amortization expense for the current quarter was essentially flat from the first quarter of last year, approximately $900 thousand.

Also, the prior year quarter notably included approximately $300 thousand of equity method losses and other related charges and adjustments for equity investment on Impaco which we were in the disposal of in the fourth quarter of last year. Interest and finance expense was approximately $590 thousand in the current quarter up slightly from $560 thousand in the first quarter of last year. As you may recall, however, under our term loan agreement, a majority of the interest due under our current debt will be paid in kind, meaning that we will accrue and not require cash payments until starting 2027.

Overall, we had a net income loss for the current quarter of approximately $2.5 million or -$0.42 per share compared with a net loss of $2.8 million or -$1.18 per share in the prior year quarter. After adjusting for certain cash and noncash items, results on a non GAAP basis were a net loss of approximately $1.4 million or -$0.24 per share for the current quarter and a net loss of approximately $1.4 million or -$0.58 per share for the prior year quarter. Adjusted EBITDA loss for the current quarter was approximately $700 thousand essentially flat from the prior year.

Once again, as a reminder, our earnings press release and Form 10-Q present a full reconciliation of our non GAAP measures to the most directly comparable GAAP measures. Now turning to our balance sheet and liquidity. As of March 31, 2026, the company's balance sheet reflected stockholders' equity of approximately $13 million restricted cash of $1.1 million, and unrestricted cash of approximately $200 thousand. I would also like to note that we had significant financing activity during 2026, extending into the month of April. In January 2026, we entered into a committed equity line facility giving us access up to $15 million of funding over the next 2 years for working capital and potential acquisition opportunities at our discretion.

Today, we have not utilized any funding under this facility. In February and March, of this year, we executed certain amendments to our term loan debt which set the stage for a significant debt financing transactions in April. In April, we paid a portion of our variable interest rate term loan debt and entered into a $3 million of senior secured notes at a fixed interest rate. And with that, I would like to turn the call back over to Bob. Bob?

Robert W. D'Loren: Thank you, Jim. Ladies and gentlemen, this concludes our prepared remarks. Operator, We are now opening the floor for the question-and-answer session.

Operator: If you would like to ask a question, please press star followed by 1 on your telephone keypad. Your first question comes from the line of Thomas Forte with Maxim Group. Please go ahead.

Analyst (Thomas Forte): Great. Thanks. So Bob and Jim, congrats on the progress. I have 1 question and 1 follow-up question. So Bob, can you talk about your current thoughts on your influencer pipeline and then remind us on how long it typically takes from the initial conversation to revenue generation.

Robert W. D'Loren: Yes. that is a good question, Tom. So, generally speaking, from the date we sign, with an influencer it is a 12-month process. To either get that influencer on air with GVC or doing live streams on any 1 of the platforms that are out there today, TikTok, Amazon. Or any of the others. It all relates to product design and development. that is generally the period that it takes. And that is why you are seeing now many of the influencers that we signed last year are beginning to launch. And we will be launching the first 5 that we executed with last year through the balance of this year. So Gemma Stafford, Jenny Martinez, recently launched.

Next will be Caesar. And then Coco Rocha, and then that will be followed by Shannon Dougherty for the Longaberger brand. Excellent. And then can you talk about your current cost structure and how we should think about these flow through of incremental revenue dollars to the bottom line? So we have been working hard to run the company as tight as we can. We were able to find some additional savings. We think that we will be able to continue to run at a lower operating cost The goal is to get it down to around $7.5 million. And then as we ramp up, because there is talent cost which is all variable, it, expenses will increase.

As a percentage of the revenue generated by the influencers. Great. Thanks for taking my questions. Thank you, Tom.

Operator: The next question comes from the line of Michael with Noble Capital Markets. Please go ahead.

Analyst (Michael Kupinski): Thank you for taking my questions. Looks like an exciting year is building for you guys. Just a couple of things. Was wondering if you Bob, if you can give us an update on maybe some additional detail on the early performance of Mesemia by Jenny Martinez on HSN, including maybe sell-through trends, reorder activity, consumer engagement metrics, things like that.

Robert W. D'Loren: Sure. Both Jenny and Gemma are scheduled throughout this year. And there is always a discovery period, Michael. Part of it is media discovery, which dayparts work best. For a particular influencer or on-air guest. And then there is product discovery. We all do the best to design products that we think the customer wants. But sometimes, you just do not get it right regardless of market research analysis that we do and then we adjust. But the first shows I thought, were good and as expected. We will make some tweaks to the product mix We found that for both Gemma and Jenny, there was a much stronger response to food products as opposed to hard kitchen products.

So for the balance of this year, we will lean more into food. The good news about food is we do not have long lead times on developing that product. All of that product is made in the United States. Gotcha. Thanks for the color.

Analyst (Michael Kupinski): And then I noticed that social media, has kind of stepped up for Cesar Millan, recently, and I was just wondering, do you have an update when Cesar Millan products will be launched? I know that you indicated in the fall maybe was wondering if you have a specific date around that And then will this be a step-by-step rollout, or will there be a significant number of products introduced all at 1 time? I am just kind of curious on how the rollout is going to look.

Robert W. D'Loren: So typically, there is a cadence, Michael, to product categories when you build a licensing portfolio for any brand. But for Caesar, we expect there will be many more categories this year, in fact, our licensees are in the market selling as we speak. For the fall into brick and mortar and ecommerce retailers like Amazon. We do expect to launch Caesars Amazon store. In the next 60 days, and the first products on the Amazon store will be EcoStrux cleaning products. And, shampoos and conditioners, and collars, leashes, and dog apparel, and other dog accessories. Thank you.

And then I know that I was just wondering if you could just talk a little bit about the retail expansion currently planned beyond QVC and HSN for some of your other brands as well. So all of the brands are planned for distribution in brick and mortar and ecommerce retailers as well as on live-stream platforms. Including QVC and HSN. Today we believe, and we have always believed, you have to be everywhere where people are shopping. And you cannot exclude any of those distribution points. And we will roll out all the brands across all of those retail categories. Gotcha.

And then has the disruption to the QVC restructuring normalized now Have you seen any further impacts on launch timing, vendor relationships or future distribution plans related to the QVC No. There was actually little disruption from their restructure. I think it was a brilliant job that management did at QVC. They are paying all vendors on time as usual. And I believe that they are in a very, very good place at the moment. To move forward into streaming. Gotcha. And I know in the past-- I am sorry. If I can sneak 1 more question in. I know in the past, you talked a little bit about the potential for acquisitions.

Any additional color on the pipeline for future acquisitions, whether our strategic partnerships Well, there is a big strategic partnership that we have been working on for the last year. And we are hopeful that we will be able to announce that before the end of the second quarter. And then in terms of acquisitions, we look at many transactions every month. Whether they are brand transactions or operating company acquisitions. That would help with our distribution effort. And, certainly, if something were to come up, along those lines, it would be transformative. Great. Thanks for taking all my questions, and good luck to you guys. Thank you, Michael.

Operator: There are no further questions at this time, so I will now turn the call back to Robert D'Loren for closing remarks.

Robert W. D'Loren: Thank you, operator. Ladies and gentlemen, thank you all for your time this afternoon. We greatly appreciate your continued interest and support in Xcel Brands. As always, stay fit eat well, and be healthy.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

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